Provera: Pinning hopes on tie-up with ChemChina.
Reuters/Beijing/Milan
Italian tyre maker Pirelli has a strong future with owner-to-be China National Chemical Corp and is not talking to others about a possible counterbid, CEO Marco Tronchetti Provera told Reuters in an interview on Thursday.
ChemChina on Sunday agreed to become the majority owner of the world’s fifth-largest tyre maker as part of a multi-layered €7.3bn ($8bn) deal, putting one of Italy’s oldest household names in Chinese hands.
The deal allows the 67-year-old Tronchetti Provera, one of Italy’s best-known businessmen who married into the Pirelli founding family 30 years ago, to stay on as chief executive for another five years.
ChemChina is “good for the future of Pirelli and guarantees its global growth,” Tronchetti Provera said in the interview. “Capital is not coming in to colonise the company.”
In the wake of the announcement, the market speculated that Japanese tyre maker Bridgestone could be putting together a counterbid. Tronchetti Provera said a possible link-up between Pirelli and Bridgestone would be “a disaster”, citing too many overlaps between the two companies. Pirelli had looked for a partner that would make sense industrially, not just financially. “Sometimes higher offers end in tragedies,” said the Italian businessman.
Tronchetti Provera said he had first been approached by ChemChina’s Chairman Ren Jianxin three years ago and the two executives visited each other’s plants. But they could not fully agree a deal and the talks were put on ice.
Ren came back six months ago and talks resumed. Before striking the deal, Pirelli had also held in-depth discussions with two other Asian, non-Chinese players over a possible deal involving Pirelli’s truck-tyre business, Tronchetti Provera said.
The Italian executive did not name the two players involved, but said they did not offer the same synergies as ChemChina.
Tronchetti Provera said the price of 15 euros per share offered by ChemChina was “very good”. The deal will give state-owned ChemChina access to technology to make premium tyres that can be sold at higher margins. It will give the Italian firm a boost in the huge Chinese market and strengthen its truck tyre business.
Tronchetti said his main conditions for the deal were that the headquarters and technology base of Pirelli remain in Italy and that the current management will remain. He said Ren wanted ChemChina to become the majority owner in return for its large investment.
The Pirelli deal marks the latest in a string of takeovers that leave chunks of Italy Inc in foreign hands. Yet Tronchetti Provera said it was not difficult to convince Prime Minister Matteo Renzi of its industrial logic.
He said the current government had seemed more open to foreign ownership than past administrations.
When he called Renzi on Saturday, the evening before the signing of the deal, Tronchetti Provera told him that, without a deal, Pirelli might fall prey to a suitor who would want to split up the firm.
As part of the complex deal, which involves a reshuffle of some of the company’s main shareholders, Pirelli may be taken private and then re-listed within four years. Tronchetti Provera said the new listing would not necessarily be in Milan.
Tronchetti Provera said that while the agreement envisioned him staying on as Pirelli CEO for five years, he could leave the company earlier if he found the right successor, adding the choice could fall to an outsider or even a Chinese executive.
“I’ve said many times that one day I just want to watch Pirelli’s success while sailing,” he said.
